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Mustek plans to make Rectron a wholly owned subsidiary by way of an
offer to shareholders, after which it is to delist the company.
Market watchers
had been speculating since January, when the two companies issued a
joint cautionary notice, that consolidation was on the cards.
Mustek and the key
Rectron executives, who together own 88.9% of Rectron, are excluded
from the offer and will become the sole shareholders if the offer is
accepted.
Rectron minority
shareholders will be offered 80c a share, which is at a 33% premium to
the weighted average trading price for the 40 trading days before 28
February. It is 30c higher than yesterday's 50c close.
Should the offer
be accepted, Mustek will pay a total of about R10.6 million to buy the
shares.
Mustek says
Rectron's directors believe the negative sentiment towards companies
with small market capitalisation and limited liquidity will preclude
any rapid recovery of the Rectron share price.
As a result, there
is a lack of sufficient institutional and analyst interest in Rectron.
The company is also unable to raise equity at fair value to fund
future expansion. The company believes that management time and
expenses related to being listed are not justifiable.
Shareholders
holding 88.1% of the offer shares have furnished irrevocable
undertakings that they will accept the offer. In terms of legislation,
Mustek needs holders of 90% of the shares to accept before it can
delist Rectron.
The offer is also
conditional on acceptance with regard to 90% of the offer shares.
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